More problems with the Renewable Fuel Standard – an ethanol and biodiesel US transportation fuel supply blending requirement – have arisen with fraud allegations against an Indiana company that sold 33.5 million renewable-fuel credits for biofuel it never produced. This is not the first time fraudulent renewable-fuel credits have disrupted the RIN market and the EPA has been criticized for creating a flawed market it cannot adequately enforce.

One of the issues involves EPA violations filed against oil companies and refiners that unknowingly purchased bogus RINs. ExxonMobil reportedly paid a $165,407 penalty for buying fake credits from a company called Green Diesel.

American Fuel & Petrochemical Manufacturers (AFPM) President Charles T. Drevna said the following in response to the latest EPA violation notice announcement to AFPM member companies:

“EPA unfortunately continues to hold obligated parties responsible for illegal activities perpetrated by biodiesel producers such as E-Biofuels. Following the EPA’s initial imposition of penalties against obligated parties who innocently relied upon buying government-mandated quantities of biodiesel from EPA-registered producers on an EPA-controlled trading system, the industry developed due diligence programs designed to reduce the risk of purchasing fraudulent RINs. In the absence of an EPA-approved affirmative defense tied to reasonable due diligence standards, the industry remains unfairly exposed to a system that actually penalizes the victim of fraud rather than focusing on the perpetrator of the crime.” Drevna – AFPM

A National Biodiesel Board spokesman reportedly said this in response to the incident:

“This fraud is disappointing for everyone, but it is important to remember that these are isolated cases from several years ago…Despite what RFS critics would like us to believe, they do not show that the RFS is broken any more than an isolated case of trading fraud shows the stock market is broken.”

Nevertheless, US refining interests are ratcheting up the pressure on congress to either scrap or deeply reform the RFS program. EPA recently proposed the first ever annual decrease in mandated ethanol blending requirements, a recognition of the fact that the so called blendwall has been reached, and that RFS adjustments are required.